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LAS VEGAS (FOX5) -
Nevada's first medical marijuana establishment has received the green light from the state to begin cultivating plants.
Euphoria Wellness, located on South Jones Boulevard near West Robindale Road, is nearly set to open its doors to patients.
FOX5 was granted a tour of the facility on Tuesday, and it is constructed like a fortress. Metal barricades are in place at the entrance of the dispensary to keep vehicles from being rammed through. There are security cameras located inside and outside of the building. Windows are barred.
The business was previously known as Euphoria Spa and Salon. Managing Director Darlene Purdy said just one thing remains before patients can be served.
"Once a laboratory opens up, then we can get our product tested through a lab, and we're able to open up," Purdy said.
Before that can happen, an advisory committee will inspect levels of pesticides and metals in the product. Then Euphoria Spa can stock what it calls its Bud Bar.
"The product will be inside. They can smell the product and look at the product by magnification," Purdy said.
Customer service agents will be on hand to assist patients with picking strains of marijuana, providing information about THC and CBD levels.
The dispensary will also sell vaporizers, glass pipes and marijuana crushers.
"The agent will then walk them up to the desk, and at the point of sale we'll have separate agents working behind the desk at point of sale," Purdy said.
Euphoria Wellness' products will be locked in cabinets until sold. After business hours, they will be stored in a key-coded vault.
The dispensary has also received approval to build a cultivation center and production facility. Those are being constructed at a separate site.
It's expected the product will be shipped to Euphoria Wellness by next week.
Read more: http://www.fox5vegas.com/story/28607174/nevadas-first-medical-pot-business-set-to-open-in-vegas#ixzz3VPNVE2Kf
Scooped another 1.5 mil shares this AM. I really wish I could have predicted that the share price would have dropped like this, since I began buying stock with PAZOO since May 2014. BIG DIFFERENCE in price !!! Cant be greedy though, ultimately this company will be huge, and the stock price over the past 10 months, is nothing compared to where it will be in a year. Really EXCITED where we are going collectively as a company. Outstanding management, outstanding product, bright future for all of us.
I truely hope your are correct, in regards to the $100 million cap. That would be serious $$$$$ for the share price.
With the Feds eventually cracking down more on MMJ, with our outstanding total score( 241/250 ), all this plays in our favor. It's gonna squeeze out the smaller, less efficient labs that are not as qualified as PAZOO in other states. The Feds won't stand for anything but qualified screening labs in the future since the product is smoked / ingested / eaten, etc. They want their cheese too. They are going to look at this as closely as they do Tylenol. We are in a friggin golden position here with PAZOO.
Any take on the large volume today with no overall movement of value ?? Thanks
on that being said, are you recommending, that if we are going to pull the trigger on more shares, do it sooner vs. later ?
Not in a big rush for anything here......just waiting for someone who has lost patience from the most recent promotion and is ready to dump their shares at a stupid price. I have been here a long time. Already have plenty, this is all gravey from here.....Really excited about the next 6-9 months for PAZOO.
Hopefully drops to 0.0058 to pick up more shares....
I have 1.7 million, waiting for pick up........
March 16, 2015
Rec Marijuana Will Go to 2016 Ballot in Nevada
Tags: Nevada marijuana
With the Nevada state legislature adjourning on Friday without taking action on a proposed recreational marijuana initiative, voters will now decide whether they want to legalize recreational marijuana in 2016.
Backers had previously collected nearly 200,000 signatures to either force legislators to enact their initiative or put it on the ballot. When the lawmakers abstained from voting on the issue, the measure was automatically forwarded to next year’s ballot for a popular vote.
Under the terms of the initiative, the state Department of Taxation would oversee rec businesses, including vendors, growers, manufacturers, wholesalers and testing labs. A 15% excise tax would be applied to wholesale transactions, while retail sales would be taxed at already-established state and local rates, according to Marijuana Policy Project.
Zoning may still be an issue for some if the measure passes, since local governments will maintain control over locations for cannabis companies.
After reading this, you need to just skip the lab and go straight to Cheetahs to loosen up a tad bit bro....Grab a few or 10 drinks as well, it will be good for you.
Come to Vegas and check it out. Afterwards, you can go across the street to Cheetahs gentleman's club and have an afternoon delight.
Yep, PZOO has HUGE upside. It has had it for a long time, just been waiting for the golden smoke out day, to get product in the lab & move forward. Very exciting !!!!
PZOO is not in the same realm as, lets say TLPY or other pump & dumps. PZOO is a solid company, building towards in the correct direction. The end of these promotions for them, I would guess, are coming to an end. If they were a typical penny stock, they would be at $0.30 by now, just on sheer anticipation that was proven back in Nov. They are doing things correctly, gradually building towards a solid foundation. PZOO = LONG
Talk tmw.....lights out bro
?Marijuana Business FactbookRecreational Profits eBookFunding & Financing eBookPrint MagazineHome > Briefs > Professor Projects N...March 5, 2015
Professor Projects Next 5 States to Legalize Rec
Tags: marijauan legalization, recreational cannabis
California, Illinois, New York, Nevada and Vermont could become the next states to legalize recreational marijuana, according to a Kansas University professor who has studied the history of cannabis.
Barney Warf, a professor of geography at KU, said his prediction is based on current laws, voter leanings and the fact that all five states already have medical marijuana.
Warf is the author of “High Points: An Historical History of Cannabis,” which was published in the peer-reviewed journal Geographical Review in September, according to Medicalexpress.com.
California voters “are sure to” legalize rec in 2016, Warf predicts. Nevada leans libertarian like Alaska (which legalized rec marijuana in 2014), Vermont is liberal, Illinois is “progressive” and New York legalized MMJ last year.
Remember th 40,000,000 shares from the recent s-1/a ? It could be liquidating these shares now from Premier Venture. Pazoo has WAY too much invested here to turn & burn, die. This will all work out, just watch over the next 3 months. It will all pan out......
Thats exactly what I was saying. We dont need that type of chaos, it only devalues the stock. We lose positive momentum, it makes the company look like another typical penny stock, which it's not. If this was a " typical " penny stock, with all the great news over the past 3-4 months, the shares would be in the mid $0.60's. With the shares value at it's current price, is fair. They have no revenue, so therefore, no true value, YET !!!
Looks like your boy went short......
These penny stock promotions kinda piss me off. First of all, I don't blame the day traders that they want to get in and make a 20 % gain or so each day. I would want the same. But the thousands of $$$'s that was spent on these promotions, just to see the company lose upward and positive momentum, which we were gathering, go down the drain ( down 16.82 % yesterday bc of multiple promotions ). I would guess, that there are VERY FEW of the people that were exposed to the company from these promotions, actually will stick around for the LONG, like the 20 or 30 of us that have been here for a quite a while now. PAZOO is better than a turn & burn company, or a revolving penny stock, that can churn out a small 20-30 % day gain. We should build a steady and strong company, not a flash in the pan, burn out in 1-3 days. Those days are over with this company. We should let our performance in the next 3-6 months be our promotion & reputation, not penny promotions. We are better than that, and it will show in the next 3 months.
The sell off begins.....
Well said David, well said....
I must first admit that I am not a guy with any formal financial education. I have to say, I am a big fan of PZOO & it's POTENTIAL, but I am concerned about the financials. I'm concerned about the amount of shares now floating out there, the debt & the management the of finances. Even with the delay of the cultivation facilities due to lawsuits, I am wondering on how long it would really take to turn a profit, even when product is in the lab ? It's a little concerning.
Ok Nostradamus, what's next ??
With the 21 million volume on this past Friday, then Monday nearly 11 million trading volume, something could be in the works for PZOO soon. It's just too suspicious to have 2 continuous days of abnormal, high trading days like that......something could be setting up.
This can only help us, in particular with the Harris portion of PZOO. With the reciprocity judgment for Nevada, the adjacent western states that are listed below, could mean even more revenue for PZOO. The next 6 months will be very exciting for PZOO.
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Marijuana Business FactbookRecreational Profits eBookFunding & Financing eBookPrint MagazineHome > Medical Marijuana News By State > California Medical Cannabis Business & Marijuana Legal News > Chart of the Week: M...February 9, 2015
Chart of the Week: Marijuana Startup Interest Booming in California, Washington State & Colorado
Tags: chart of the week, COTW, marijuana startup activity
By Marijuana Business Daily staff
California has climbed over several other powerhouse cannabis states and now ranks as the most popular market for entrepreneurs starting marijuana companies, despite an unstable business climate fostered by a lack of statewide MMJ regulations.
Nearly 20% of entrepreneurs currently in the process of starting cannabis-related companies are located in California, according to the 3rd Annual Marijuana Business Professionals Survey.
The results are vastly different from last year, when Washington State held a commanding lead over every other state. In the 2014 survey, 21.3% of respondents planning to launch cannabis companies were eyeing Washington. Colorado came in a distance second (8.9%) last year, followed by Illinois (8.3%), Massachusetts (8.2%) and California (7.5%).
This time around, California edged out Washington State, where 15.6% of respondents launching marijuana companies are based.
Other popular states for entrepreneurs include Colorado, which opened the door to competition in its recreational market last fall; Nevada, which is moving forward with its MMJ program; and Oregon, which recently paved the way for state-licensed medical cannabis companies and is in now setting up a framework for rec sales.
The survey – spearheaded by Marijuana Business Media, the parent company of Marijuana Business Daily – was conducted online between Jan. 22 and 29. Of the nearly 800 respondents, 205 indicated they are currently in the process of starting cannabis companies, including everything from dispensaries, retail stores and grows to infused products companies and ancillary firms.
The fact that California is a hotbed for startup activity is somewhat surprising given frequent turbulence in the market. However, some cities have paved the way for locally licensed dispensaries and grows, creating new business opportunities.
The state has also seen a surge in delivery-related services. And more mainstream investors in California – including those in Silicon Valley – are pumping money into the cannabis industry, fueling startup growth in the region.
At the same time, California has benefited from a drop in business opportunities elsewhere. A year ago, entrepreneurs were flocking to set up businesses ahead of the launch of recreational marijuana sales in Washington State. Startup activity there has naturally lessened since sales began last summer.
Massachusetts was also hot a year ago as entrepreneurs laid down plans to apply for dispensary and grow licenses. This year, however, it didn’t even make the top 10 states for planned startup activity. The state’s MMJ program has experienced numerous delays, and the first dispensaries have yet to open.
Startup activity in general is strong around the country as new markets emerge. More than 25% of all respondents to the survey said they are currently in the process of lanching cannabis companies.
For those of us that have been watching, montoring and following PZOO, we all know what's up in the next 6 months. The low volume on Friday, was likely an a near high trading day us. It really doesn't matter right now what is happening with the stock price. They are likely liquidating shares to fund the lab / permits / etc. As soon as the product hits, we all will be SOOOO GOLDEN !!!
Great info Dave, thank you.
Tmw AM, more to add on as well. I thinks it's great. It allows me more time to collect more & more shares. PZOO can only go up once they have product in the lab. No product = no $$$$. It all makes sense.
I think the stock price right now is great. I'm totally excited. It allows us to purchase more of the stock at a ridiculously low price. The quote" It takes $$ to make $$ ". This company is the perfect example. Spending money on the lab now, prepping for the product in a month or two. Wouldn't you be concerned if this stock shot up to $0.25 all of a sudden, with no product in the lab ? It would make you highly suspicious that this is being built up as a another pump & dump.
The company has little value at their current status. The lab is the golden ticket. I plan to grab another 4 million shares soon. What's the worse case scenario, it goes to $0.40 by years end ? You still have made stupid amounts of $$$ when you bought at $0.012 or $0.023.
Crazy amount of volume today
Same here Dave.
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You are so right, SUPER SALE RIGHT NOW !! I'm gonna pick another million this week, this stock is super cheap right now. I cant wait to see where we are in 6-9 months from now. We should be in other states by years end. SO EXCITED !!!
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12 Marijuana Stocks For Your Do Not 'Buy And Hold' List - Part II
Jan. 6, 2015 1:17 PM ET | 35 comments | Includes: ACOL, AERO, AGTK, ATTBF, BAYPD, BRDT, CBGI, ERBB, FWDG, GRCU, ICBU, IMLFF, LGBI, LXRP, MBOO, MCIG, NDEV, PMCM, REFG, RSSFF, SING, SPRWF, THCZ, UPOT
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Summary
•I have selected a second set of 12 marijuana stocks to research, where n=13 (~54%) of N=24 stocks are incorporated in the state of Nevada.
•I have attempted to merge the most significant content from the first article with this one, and will continue with this methodology, so the list will be cumulative.
•Again, most of these stocks are possible "day-trades," but unless something very significant changes, most are not good for a long-term "buy and hold."
•Look at the "event dates," and how the 52-week highs were achieved.
•Of course, you can make money trading any stock, but with marijuana stocks, proceed cautiously to preserve capital.
This article was sent to 12 people who get email alerts on ACOL.
Get email alerts on ACOL »
Additional Disclosure: I do not have any money invested in any of these stocks. Part I is located here. After completed all parts, I will be in a position to develop and back-test a portfolio for future consideration.
Methodology
Recall, I am examining marijuana stocks and checking for:
1.State of incorporation (Nevada (NV) is, generally, a negative).
2.Auditor/Accountant and legal counsel and the quality of their other publicly traded clients, based on a "we are known by the company we keep" approach. This website works well for this research.
3.Looking at (1) working capital position (negative is bad); (2) where are cash flows coming from (if negative from operations and positive from financing, this is bad); (3) the number of "paid for" press releases (could suggest a "pump and dump," and they might engage in suboptimal trading, where you do not benefit from the "pump" if they "dump" too quickly); and (4) a history of reverse splits (see the BAYP example in Part I, and below, where they pumped, dumped, did the reverse split, and are set up for and could repeat this process).
4.Finally, a firm moving from gold mining or exploration or energy (the "last big things") to marijuana (the "next big thing") warrants a high degree of professional skepticism.
Why a Move from Mining to Marijuana Represents a "Red Flag"
While not a perfect indicator, a firm moving from the "last big thing" to the "next big thing" can be troublesome and a cause for concern. A move from mining to marijuana is particularly troublesome, since the two industries would appear to represent less-than-natural vertical integration transitions, and those possessing expertise in the mining industry might not be the best team to select for entry into the agricultural or marijuana industry. Therefore, you must consider the possibility that motivation for the move is based only on the desire to exploit pent-up sector demand for marijuana stocks and investments. I will use some long-term charts of gold and silver prices to elaborate.
The 15-year chart for gold follows:
(click to enlarge)
The 15-year chart for silver follows:
(click to enlarge)
Gold and silver and mining are no longer the "next big thing." Marijuana is the "next big thing." If you want to attract investors interested in the "next big thing," it makes sense to exit mining for gold and silver (or even energy, with oil prices below $50 per barrel) and enter the marijuana industry. In particular, if you failed in the mining industry, those caught up in the excitement of the marijuana craze will invest without researching your firm's history and/or you might attract the less sophisticated investor. Every little bit of buying pressure helps. And a mere mention of your firm's entry into the marijuana industry is likely to increase your firm's stock price and market capitalization. For this reason, I track these transitions in the table that follows.
Both the First Set and the Second Set of 12 Firms and Tickers Follow
Recall that the first 4 of the first set of 12, or about ~33% of the firms, were in some form of mining or energy industry. Four of the second set of 12, or about ~33% of the firms, were also in some form of mining or energy industry.
Also note that the vast majority of the 52-week highs for these 24 stocks occurred in March, 2014, the event date/period for the Canadian MMPR (Marihuana for Medical Purposes Regulations). That was the event date that drove so many of these 52-week highs.
Thirteen of the 24 marijuana stocks (54%) are Nevada corporations. Nevada only has 8% of the market for corporation law, so it is over-represented.
Four of the 24 marijuana stocks are Delaware corporations. Delaware has about 54% of the market for corporate law. Therefore, it is under-represented.
The 52-Week Highs
The below stacked-bar graphic provides an illustration of 52-week highs for the first set (1st) and second set (2nd) of 12 marijuana stocks examined (N=24 or n=15 trading in March 2014):
The List of 12 + 12 = 24 MJ Stocks
Again, just as in the case of Part I, the stocks are listed in alphabetical order of the ticker symbol. The below is a table of the data from which the above graphic was developed:
1st
2nd
State of
MJ from
52-Week
12
12
Ticker
Incorporation
Mining?
High
1
ACOL
FL
No
19-Mar IPO
*
2
AERO
NV
No
10-Mar
3
AGTK
DE
No
6-Jan
4
ATTBF
Canada
No
19-Mar
5
BAYPD
NV
Yes
1-Sep
1
BRDT
DE
No
19-Mar
2
CBGI
NV
No
18-Mar
3
ERBB
NV
No
24-Mar
6
FWDG
DE
No
17-Jul
*
4
GRCU
CO
No
7-Apr
5
ICBU
FL
No
24-Mar
7
IMLFF
Canada
No
21-Oct IPO
*
6
LGBI
NV
Yes
25-Jul
*
7
LXRP
NV
Yes
19-Mar
8
MBOO
NV
Yes
Unknown
*
9
MCIG
NV
No
19-Mar
8
NDEV
NV
No
26-Aug
10
PMCM
DE
No
26-Mar
9
REFG
NV
Yes
14-Mar
11
RSSFF
Canada
Yes
10-Jun IPO
*
10
SING
NV
No
10-Jan
11
SPRWF
Canada
Yes
22-Oct
*
12
THCZ
NV
No
12-Aug
*
12
UPOT
NV
Yes
26-Mar
*
* Not trading in March, so excluded from graphic.
Additional information is provided below for this second group of 12 marijuana stocks:
1. Acology, Inc. (OTCQB:ACOL) - Tupperware for Pot?
Acology, Inc. is a Florida Corporation. With a negative working capital position and a significant amount of current debt from related parties, this firm has an impressive gross profit ratio, but even more significant general and administrative expenses. Positive cash flows are being generated from financing activities:
“
The Company is a wholesaler of proprietary polypropylene containers used for controlled dispensing and storage of pharmaceuticals and medicine.
This is different:
“
The Company uses office space from a family member of a stockholder of the Company at no rent.
Convertibles can be exercised at $0.05 per share, but those involved in the private placement did a bit better:
“
On March 4, 2014, Acology completed a private placement with 3 investors (the "Private Placement") of 700,000,000 shares of Common Stock for proceeds of $40,000 in cash. The price paid by each investor was $0.000571429 per share.
The stock is trading at $0.05 per share. Below is the chart for the last year:
I don't really want to pay $0.05 per share to buy 700,000,000 shares from those holding at $0.000571429 per share. On the other hand, if I was holding at this cost, I would certainly be selling. Nice market cap, at $227 million.
2. AeroGrow International, Inc. (OTCQB:AERO) - Not A Marijuana "Pure Play," But A Beneficiary of the Marijuana Stock "Frenzy"
AeroGrow International, Inc. is a Nevada corporation, but it is a real company with real operations, not a "pure play" for marijuana. I have used Miracle-Gro for decades personally, and find the product to be an impressive one. The company's business description follows:
“
AeroGrow is the creator, manufacturer and marketer of the Miracle-Gro AeroGarden line of indoor gardens for consumer markets worldwide. Headquartered in Boulder, Colorado, AeroGrow International, Inc. is the leader in the rapidly growing indoor gardening market with a commitment to "Grow Anything... Anytime... Guaranteed.
This firm has been covered by Seeking Alpha. Its 1-year chart follows:
AeroGrow has a slightly negative working capital position, positive cash flows are coming from financing activities, and it has a market cap of only $24 million. I find it incredibly interesting that this "real" firm with a "real" brand has a market cap lower than "pure play" marijuana firms with no branded products and really nothing to offer. Note that the stock price peaked in March 2014.
3. Agritek Holdings, Inc. (OTCQB:AGTK) - Formerly "Everything" And "Let's Do the Splits"
Agritek Holdings, Inc. is a Delaware Corporation. Formerly JMediSwipe, Inc., formerly Cannabis Medical Solutions, Inc., formerly Commerce Online, Inc., formerly Seraph Security, Inc., formerly Ebenefitsdirect, Inc., formerly Provo International, Inc., and formerly Frontline Communications Corp., with shares and warrants issued prior to deletion from the AMEX, a 2:3 split, a 1:200 reverse split, a 2:1 split, a 1:1,500 split, a 10:1 split, and yet another 1:10 split. This firm needs to change its name to "Formerly Split," "the splits," "the land of formerlies," or something that is more descriptive of its history. The 1-year chart for Agritek follows:
This firm has a negative working capital position, convertible notes, and, no surprise here... no revenues for 2014. A reading of its financials actually suggests that new management has innovated a technique for the elimination of revenues! Fortunately for them, they can issue convertible notes to generate some positive cash flows. I guess they plan to lease real estate to those growing marijuana. Sorry the company missed the March 2014 marijuana frenzy. Good luck on buying and holding the stock on this one.
4. Abattis Bioceuticals Corp. (OTCQX:ATTBF) - Not a Marijuana "Pure Play"
Abattis Bioceuticals Corp. is a Canadian corporation. The company has a wonderful, positive working capital position and no revenues. Positive cash flows have been generated from stock sales. It is involved in "... producing, licensing and marketing proprietary ingredients and formulas for use in the BioPharma, Nutraceutical, Cosmetic and Animal Nutrition markets." Note that the company appears to have benefited from the March 2014 marijuana frenzy. Its 1-year chart follows:
This is not a marijuana "pure play." From the footnotes of Abattis Bioceuticals' financial statements:
“
In December 2013, the Company's wholly owned subsidiary, Animo Wellness Corporation doing business as Medical Marijuana Labs ("MMLC"), signed a five year lease with PurGenesis Technologies, Inc. for the lease of approximately 5,000 square feet of lab and production space at a cost of $120,000 in annual gross rent.
5. Headline Suggests Vertical Integration Of Mining To Marijuana For Bayport International Holdings, Inc. (OTCPK:BAYPD)... But Only When Cash Is Needed
This Nevada corporation was successful in increasing its price per share from $0.03 to $0.26 per share with a single headline item and within a 24-hour period. The February 2014 "pump and dump" was followed by an August 2014 100:1 reverse split. The process is a simple one: (1) pump, (2) dump, and (3) reverse-split for a repeat or a firm name and ticker symbol change.
Bayport International Holdings, Inc. is a Nevada corporation and an oil and gas well drilling company. It announced that it would be entering the marijuana sector on February 18, 2014. The firm's stock price per share rose from a close of $0.03 on February 17 (pre-announcement) to close at $0.26 on February 18 (day of announcement, at 6:35 AM EST). Sufficient qualification was provided:
“
We will still remain in Gas and Oil as we feel that will always be the foundation that this company is built on. As new acquisitions occur in gas and oil we will make these announcements.
The Math is Simple
The below computation is crude, but quantifies how a simple news release or headline, at a cost of a very few hundred dollars, is so very profitable for Nevada corporations "selling stock":
Feb 18, 2014 closing PPS
$0.26
Less: Feb 17, 2014 closing PPS
$0.03
Equals: PPS difference
$0.23
February 18, 2014 shares traded
15,000,000
Maximum possible windfall
$3,450,000
To place this trading volume in context, 700 shares traded on February 14, 2014, and -0- shares traded on February 17, 2014. The 100:1 reverse split occurred on August 1, 2014.
We are known by the Company we keep. The accounting/auditing firm used by BAYP has these additional clients. Note the high representation of warning signs. Similarly, legal counsel for BAYP has these additional clients, also, with a high representation of warning signs. With a December 31 fiscal year-end, the September 30, 2014 quarterly report continues to show a negative working capital position. The firm last reported having 2 employees as of March 4, 2011, but 3 are listed: James Porter (president), Gina Porter (secretary) and Clay Franks (director of business development and vice president of exploration).
6. FutureWorld Corp. (OTCPK:FWDG) - CB Scientific Wins Product Of The Year, And No One Cares
1.FutureWorld has seen its stock price in free fall over the past month.
2.A negative working capital position is troublesome, but a recent win for "product of the year" appears to suggest a favorable future.
3.The award win appears to have had no impact on the stock price, even though a favorable spin-off appears to have been designed to provide incentives to buy and hold the stock through early April 2015.
4.With a 2014 52-week high at $0.042 and a recent price of $0.015, recent selling suggests a pattern consistent with "tax-loss selling."
5.This looks like an easy double in early 2015, when the "January effect" and spin-off shares period and event dates hit.
FutureWorld Corporation is a Delaware corporation with a negative working capital position. Consolidated financial statements include the accounts and operations of FutureWorld Corporation and its wholly-owned subsidiaries: (1) URVape, Inc., (2) HempTech Corp., (3) CB Scientific and (4) MedTest Inc. None grow, distribute or sell marijuana. FWDG had 15 employees and 7,000 shareholders of record as of October 2, 2014.
The chart, uninterrupted by the recent award win, really appears to suggest that retail traders are "dumping their losers" and/or "matching losses to gains." This is called "tax-loss selling."
CB Scientific, a wholly-owned subsidiary of FutureWorld, won the "product of the year" award at the 2014 Cannabis Business Awards on December 10, 2014. There were quite a few awards. However, "product of the year" is probably a good one to win:
Categories for the 2014 Cannabis Business Awards
1.Best Flower
2.Best Concentrate
3.Best Edible
4.Most Valuable Cannabis Industry Organization
5.Most Valuable Cannabis Activist
6.Most Valuable Cannabis Advocate
7.Most Valuable Media Source
8.Most Valuable Political Industry Representative
9.Most Valuable Non Profit
10.Best Publication
11.Most Valuable Cannabis Business
12.Most Valuable Educational Institution
13.People's Choice Invention of the Year
14.People's Choice Award for Best Marijuana Infused Product (Medical)
15.People's Choice Award for Best Marijuana Infused Product (Retail)
16.People's Choice Best Medical Center
17.People's Choice Best Retail Center
18.Cultivation Master of the Year
19.Extract Artist of the Year
20.Bud Tender of the Year
21.Manager of the Year
22.Industrial Hemp Industry's Most Influential Individual
23.5 MVP Awards
24.Product of The Year (CB Scientific THC & CBD Home Test Kits)
(click to enlarge)
The CB Scientific Spin-Off to FWDG Shareholders
CB Scientific is based in Denver, CO. Subject to certain conditions, CB Scientific will distribute 5MM shares to FutureWorld shareholders of record on each of the following event dates: (1) January 1, 2015, (2) February 1, 2015, (3) March 1, 2015 and (4) April 1, 2015. FutureWorld will, effectively, retain control of CB Scientific.
Whether by design or by accident, these shares will be made to and benefit those purchasing shares of FutureWorld on or before December 31, 2014 (the end of the "tax-loss selling" seasonal), and might stimulate some buying interest on the FWDG stock price post-early January through April 2015.
7. InMed Pharmaceuticals, Inc. (OTCQB:IMLFF) - From Software to Marijuana? Really?
InMed Pharmaceuticals, Inc., formerly, Cannabis Technologies, Inc. (CANLF), is a Canadian corporation. Before entering the marijuana sector (May 2014), it was in the networking and software business. 1:10 and 1:15 reverse splits were executed in the distant past, and predated the company's entry into the marijuana sector. Its 1-year chart follows:
This firm has a negative working capital position, no revenues and is only generating positive cash flows from financing activities. The loans are to both related and non-related parties. Consulting fees are being paid to related parties (officers). There is no compelling reason to invest in this firm, and related-party transactions of this sort are rarely positive.
8. MedBook World, Inc. (OTCQB:MBOO) - Another Mining to Marijuana Transition?
MedBook World, Inc. is a Delaware corporation with a negative working capital position. Its total assets consist of $4,349 in cash. Debt is comprised of $215,000 in shareholder loans. There are no revenues. This firm was in the book business, but incoming executives were in the mining business. IHUB lists this business as marijuana or "cannabis" as of December 2014. There is no stock price or trading activity. A 1-year chart is provided below:
The below is from the firm's 8-K filed on December 16, 2014:
“
Appointment of Officers and Directors On December 12, 2014, following the resignation of Daniel Masters as President and CEO, Mr. Frederick Da Silva was appointed President and CEO of the Registrant, to fill the vacated positions of Mr. Masters. On December 12, 2014, following the resignation of Anthony Turnbull as Secretary, Treasurer and Director Mr. Daniel Masters was appointed Secretary, Treasurer of the Registrant, and Mr. Frederick Da Silva was appointed to the Board of Directors to fill the vacated positions of Mr. Turnbull.
Biographical Information
Mr. Da Silva holds a business diploma in Finance and Marketing, and for the last five years, has been directly involved in raising investment capital for several companies in the mining and natural resource sector, ranging from start-up companies to emerging public companies. From February 2013 to the present, Mr. Da Silva has been and continues to be an officer and director of Centor Energy, Inc. From May 2013 to February 2014, Mr. Da Silva was an officer of BrightRock Gold Corp., and from March 2014 to the present, he has been [resident and a director of National Asset Recovery Corp.
9. mCig, Inc. (OTCQB:MCIG) - Consulting Pays Well, But Nothing Left For Shareholders
mCig, Inc. is a Nevada corporation with a negative working capital position. The revenues and gross margins are wonderful, but consulting fees almost perfectly match the operating loss for the past six months reporting period, at $1.8 million. The 1-year chart follows:
From the notes to the financial statements:
“
Consulting costs increased to $750,767 from $15,900 for the three months ended October 31, 2014 and 2013, respectively. Our consulting costs increase is related to increase in salaries and primarily from common stock issued for services from our Chief Executive Officer.
10. Primco Management, Inc. (OTCPK:PMCM) - Does Someone Have Change For A Penny?
Primco Management, Inc. is a Delaware corporation, and has an excessively negative working capital position, including convertible debt. The company has wonderful gross margins on tiny revenues, but its largest operating expense is consulting fees. The only positive cash flows are being generated from convertibles and the sale of stock. The 1-year chart follows:
From the notes to the financials:
“
The Company was incorporated on October 14, 2010 under the laws of the State of Delaware. The Company is a real estate management and property development company and., through its wholly-owned subsidiary, Top Sail Productions, LLC, produces and distributes recorded music and intends to co-produce for distribution lower budgeted motion pictures. In February, 2014 the Company expanded its operations to include the leasing and property management of facilities for the legal cultivation of medical cannabis, and the acquisition of and/or entering into joint ventures with third parties involving the planning, staffing, management and operation of legalized medical marijuana dispensing and cultivation.
11. Affinor Growers, Inc. (OTCQB:RSSFF) - Another Shift from Gold Mining to Marijuana
Affinor Growers, Inc. is a Canadian corporation. The company's accounting firm and the Grant Thornton name is a favorable brand. It has an extremely favorable working capital position, tiny revenues, more than $½ million (Canadian dollars) in "share-based payments," and is generating positive cash flows, only, from the sale of stock. From the notes to the financial statements:
“
As of May 23, 2014, Affinor Growers (hereafter "the Company") was specialized in exploration of gold mineral sites located in Canada, since that date, the Company is focused on the agriculture industry within North America. In May 2014, the Company decided to change its name to Affinor Growers inc. This decision aims to better reflect the mission of the Company that is to produce strawberries and other crops such as romaine lettuce and herbs and to produce and sell medical marijuana.
The 1-year chart follows:
This firm appears to spend a fair amount of money on PR releases. There is no compelling reason to invest in this firm.
12. Indie Growers Association (OTCQB:UPOT) - Another Convert from Minerals to Marijuana
Indie Growers Association is a Nevada corporation with a $68 million market capitalization. Its accounting firm has a fair number of toxic clients. The company switched from minerals to herbs in April 2014. It appear to have a negative working capital position, based on its unclassified balance sheet. Revenues of $29,000 are offset by a whopping $61.8 million extinguishment of debt (starting at a stock price of $300 per share, for the purpose of valuation). The firm's only positive cash flows are from financing activities. The 1-year chart follows:
From the notes to its financial statements:
“
The company was initially organized for the purpose of acquiring and developing mineral claims and is in the pre-exploration stage. On April 28, 2014 the Company name was changed from Viking Minerals, Inc. to Indie Growers Association to reflect the change of business. The Company through acquisition of River Ridge Sunshine Farms LLC is now in the business of sub-leasing its land to licensed marijuana growers.
On April 28, 2014, the Company entered into an agreement to acquire a 30 % interest as well as a long term lease on the remaining 70 % of River Ridge Sunshine Farms LLC ("RRSF"), a $ 1.2 Million agricultural property in Prosser, Washington in exchange for 62,000,000 shares. After completion of due diligence, the agreement was amended and executed on June 30, 2014 and completed and closed on July 1, 2014. The market value of the Company's shares as of the date of the acquisition was $0.75 per share there by valuing the acquisition at $ 46,500,000.
This stock has been a great short for some.
Summary
Recall that I am doing some preliminary research to develop a long-term marijuana portfolio for a "buy and hold." If some of these stocks are up over the past week or so, that is likely nothing more than tax-loss selling followed by the January effect, and those buying back in after 30-day wash sale rules have expired. I will work on the next 12 marijuana stocks, or Part III, in the next few months. There are about 55 marijuana stocks, so this preliminary research is just that. My objective is to provide a bit of data prior to the next big event date, which is likely to be the November 2016 elections for additional states that might consider putting recreational marijuana initiatives on the ballot.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
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12 Marijuana Stocks For Your Do Not 'Buy And Hold' List - Part II
Jan. 6, 2015 1:17 PM ET | 35 comments | Includes: ACOL, AERO, AGTK, ATTBF, BAYPD, BRDT, CBGI, ERBB, FWDG, GRCU, ICBU, IMLFF, LGBI, LXRP, MBOO, MCIG, NDEV, PMCM, REFG, RSSFF, SING, SPRWF, THCZ, UPOT
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Summary
•I have selected a second set of 12 marijuana stocks to research, where n=13 (~54%) of N=24 stocks are incorporated in the state of Nevada.
•I have attempted to merge the most significant content from the first article with this one, and will continue with this methodology, so the list will be cumulative.
•Again, most of these stocks are possible "day-trades," but unless something very significant changes, most are not good for a long-term "buy and hold."
•Look at the "event dates," and how the 52-week highs were achieved.
•Of course, you can make money trading any stock, but with marijuana stocks, proceed cautiously to preserve capital.
This article was sent to 12 people who get email alerts on ACOL.
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Additional Disclosure: I do not have any money invested in any of these stocks. Part I is located here. After completed all parts, I will be in a position to develop and back-test a portfolio for future consideration.
Methodology
Recall, I am examining marijuana stocks and checking for:
1.State of incorporation (Nevada (NV) is, generally, a negative).
2.Auditor/Accountant and legal counsel and the quality of their other publicly traded clients, based on a "we are known by the company we keep" approach. This website works well for this research.
3.Looking at (1) working capital position (negative is bad); (2) where are cash flows coming from (if negative from operations and positive from financing, this is bad); (3) the number of "paid for" press releases (could suggest a "pump and dump," and they might engage in suboptimal trading, where you do not benefit from the "pump" if they "dump" too quickly); and (4) a history of reverse splits (see the BAYP example in Part I, and below, where they pumped, dumped, did the reverse split, and are set up for and could repeat this process).
4.Finally, a firm moving from gold mining or exploration or energy (the "last big things") to marijuana (the "next big thing") warrants a high degree of professional skepticism.
Why a Move from Mining to Marijuana Represents a "Red Flag"
While not a perfect indicator, a firm moving from the "last big thing" to the "next big thing" can be troublesome and a cause for concern. A move from mining to marijuana is particularly troublesome, since the two industries would appear to represent less-than-natural vertical integration transitions, and those possessing expertise in the mining industry might not be the best team to select for entry into the agricultural or marijuana industry. Therefore, you must consider the possibility that motivation for the move is based only on the desire to exploit pent-up sector demand for marijuana stocks and investments. I will use some long-term charts of gold and silver prices to elaborate.
The 15-year chart for gold follows:
(click to enlarge)
The 15-year chart for silver follows:
(click to enlarge)
Gold and silver and mining are no longer the "next big thing." Marijuana is the "next big thing." If you want to attract investors interested in the "next big thing," it makes sense to exit mining for gold and silver (or even energy, with oil prices below $50 per barrel) and enter the marijuana industry. In particular, if you failed in the mining industry, those caught up in the excitement of the marijuana craze will invest without researching your firm's history and/or you might attract the less sophisticated investor. Every little bit of buying pressure helps. And a mere mention of your firm's entry into the marijuana industry is likely to increase your firm's stock price and market capitalization. For this reason, I track these transitions in the table that follows.
Both the First Set and the Second Set of 12 Firms and Tickers Follow
Recall that the first 4 of the first set of 12, or about ~33% of the firms, were in some form of mining or energy industry. Four of the second set of 12, or about ~33% of the firms, were also in some form of mining or energy industry.
Also note that the vast majority of the 52-week highs for these 24 stocks occurred in March, 2014, the event date/period for the Canadian MMPR (Marihuana for Medical Purposes Regulations). That was the event date that drove so many of these 52-week highs.
Thirteen of the 24 marijuana stocks (54%) are Nevada corporations. Nevada only has 8% of the market for corporation law, so it is over-represented.
Four of the 24 marijuana stocks are Delaware corporations. Delaware has about 54% of the market for corporate law. Therefore, it is under-represented.
The 52-Week Highs
The below stacked-bar graphic provides an illustration of 52-week highs for the first set (1st) and second set (2nd) of 12 marijuana stocks examined (N=24 or n=15 trading in March 2014):
The List of 12 + 12 = 24 MJ Stocks
Again, just as in the case of Part I, the stocks are listed in alphabetical order of the ticker symbol. The below is a table of the data from which the above graphic was developed:
1st
2nd
State of
MJ from
52-Week
12
12
Ticker
Incorporation
Mining?
High
1
ACOL
FL
No
19-Mar IPO
*
2
AERO
NV
No
10-Mar
3
AGTK
DE
No
6-Jan
4
ATTBF
Canada
No
19-Mar
5
BAYPD
NV
Yes
1-Sep
1
BRDT
DE
No
19-Mar
2
CBGI
NV
No
18-Mar
3
ERBB
NV
No
24-Mar
6
FWDG
DE
No
17-Jul
*
4
GRCU
CO
No
7-Apr
5
ICBU
FL
No
24-Mar
7
IMLFF
Canada
No
21-Oct IPO
*
6
LGBI
NV
Yes
25-Jul
*
7
LXRP
NV
Yes
19-Mar
8
MBOO
NV
Yes
Unknown
*
9
MCIG
NV
No
19-Mar
8
NDEV
NV
No
26-Aug
10
PMCM
DE
No
26-Mar
9
REFG
NV
Yes
14-Mar
11
RSSFF
Canada
Yes
10-Jun IPO
*
10
SING
NV
No
10-Jan
11
SPRWF
Canada
Yes
22-Oct
*
12
THCZ
NV
No
12-Aug
*
12
UPOT
NV
Yes
26-Mar
*
* Not trading in March, so excluded from graphic.
Additional information is provided below for this second group of 12 marijuana stocks:
1. Acology, Inc. (OTCQB:ACOL) - Tupperware for Pot?
Acology, Inc. is a Florida Corporation. With a negative working capital position and a significant amount of current debt from related parties, this firm has an impressive gross profit ratio, but even more significant general and administrative expenses. Positive cash flows are being generated from financing activities:
“
The Company is a wholesaler of proprietary polypropylene containers used for controlled dispensing and storage of pharmaceuticals and medicine.
This is different:
“
The Company uses office space from a family member of a stockholder of the Company at no rent.
Convertibles can be exercised at $0.05 per share, but those involved in the private placement did a bit better:
“
On March 4, 2014, Acology completed a private placement with 3 investors (the "Private Placement") of 700,000,000 shares of Common Stock for proceeds of $40,000 in cash. The price paid by each investor was $0.000571429 per share.
The stock is trading at $0.05 per share. Below is the chart for the last year:
I don't really want to pay $0.05 per share to buy 700,000,000 shares from those holding at $0.000571429 per share. On the other hand, if I was holding at this cost, I would certainly be selling. Nice market cap, at $227 million.
2. AeroGrow International, Inc. (OTCQB:AERO) - Not A Marijuana "Pure Play," But A Beneficiary of the Marijuana Stock "Frenzy"
AeroGrow International, Inc. is a Nevada corporation, but it is a real company with real operations, not a "pure play" for marijuana. I have used Miracle-Gro for decades personally, and find the product to be an impressive one. The company's business description follows:
“
AeroGrow is the creator, manufacturer and marketer of the Miracle-Gro AeroGarden line of indoor gardens for consumer markets worldwide. Headquartered in Boulder, Colorado, AeroGrow International, Inc. is the leader in the rapidly growing indoor gardening market with a commitment to "Grow Anything... Anytime... Guaranteed.
This firm has been covered by Seeking Alpha. Its 1-year chart follows:
AeroGrow has a slightly negative working capital position, positive cash flows are coming from financing activities, and it has a market cap of only $24 million. I find it incredibly interesting that this "real" firm with a "real" brand has a market cap lower than "pure play" marijuana firms with no branded products and really nothing to offer. Note that the stock price peaked in March 2014.
3. Agritek Holdings, Inc. (OTCQB:AGTK) - Formerly "Everything" And "Let's Do the Splits"
Agritek Holdings, Inc. is a Delaware Corporation. Formerly JMediSwipe, Inc., formerly Cannabis Medical Solutions, Inc., formerly Commerce Online, Inc., formerly Seraph Security, Inc., formerly Ebenefitsdirect, Inc., formerly Provo International, Inc., and formerly Frontline Communications Corp., with shares and warrants issued prior to deletion from the AMEX, a 2:3 split, a 1:200 reverse split, a 2:1 split, a 1:1,500 split, a 10:1 split, and yet another 1:10 split. This firm needs to change its name to "Formerly Split," "the splits," "the land of formerlies," or something that is more descriptive of its history. The 1-year chart for Agritek follows:
This firm has a negative working capital position, convertible notes, and, no surprise here... no revenues for 2014. A reading of its financials actually suggests that new management has innovated a technique for the elimination of revenues! Fortunately for them, they can issue convertible notes to generate some positive cash flows. I guess they plan to lease real estate to those growing marijuana. Sorry the company missed the March 2014 marijuana frenzy. Good luck on buying and holding the stock on this one.
4. Abattis Bioceuticals Corp. (OTCQX:ATTBF) - Not a Marijuana "Pure Play"
Abattis Bioceuticals Corp. is a Canadian corporation. The company has a wonderful, positive working capital position and no revenues. Positive cash flows have been generated from stock sales. It is involved in "... producing, licensing and marketing proprietary ingredients and formulas for use in the BioPharma, Nutraceutical, Cosmetic and Animal Nutrition markets." Note that the company appears to have benefited from the March 2014 marijuana frenzy. Its 1-year chart follows:
This is not a marijuana "pure play." From the footnotes of Abattis Bioceuticals' financial statements:
“
In December 2013, the Company's wholly owned subsidiary, Animo Wellness Corporation doing business as Medical Marijuana Labs ("MMLC"), signed a five year lease with PurGenesis Technologies, Inc. for the lease of approximately 5,000 square feet of lab and production space at a cost of $120,000 in annual gross rent.
5. Headline Suggests Vertical Integration Of Mining To Marijuana For Bayport International Holdings, Inc. (OTCPK:BAYPD)... But Only When Cash Is Needed
This Nevada corporation was successful in increasing its price per share from $0.03 to $0.26 per share with a single headline item and within a 24-hour period. The February 2014 "pump and dump" was followed by an August 2014 100:1 reverse split. The process is a simple one: (1) pump, (2) dump, and (3) reverse-split for a repeat or a firm name and ticker symbol change.
Bayport International Holdings, Inc. is a Nevada corporation and an oil and gas well drilling company. It announced that it would be entering the marijuana sector on February 18, 2014. The firm's stock price per share rose from a close of $0.03 on February 17 (pre-announcement) to close at $0.26 on February 18 (day of announcement, at 6:35 AM EST). Sufficient qualification was provided:
“
We will still remain in Gas and Oil as we feel that will always be the foundation that this company is built on. As new acquisitions occur in gas and oil we will make these announcements.
The Math is Simple
The below computation is crude, but quantifies how a simple news release or headline, at a cost of a very few hundred dollars, is so very profitable for Nevada corporations "selling stock":
Feb 18, 2014 closing PPS
$0.26
Less: Feb 17, 2014 closing PPS
$0.03
Equals: PPS difference
$0.23
February 18, 2014 shares traded
15,000,000
Maximum possible windfall
$3,450,000
To place this trading volume in context, 700 shares traded on February 14, 2014, and -0- shares traded on February 17, 2014. The 100:1 reverse split occurred on August 1, 2014.
We are known by the Company we keep. The accounting/auditing firm used by BAYP has these additional clients. Note the high representation of warning signs. Similarly, legal counsel for BAYP has these additional clients, also, with a high representation of warning signs. With a December 31 fiscal year-end, the September 30, 2014 quarterly report continues to show a negative working capital position. The firm last reported having 2 employees as of March 4, 2011, but 3 are listed: James Porter (president), Gina Porter (secretary) and Clay Franks (director of business development and vice president of exploration).
6. FutureWorld Corp. (OTCPK:FWDG) - CB Scientific Wins Product Of The Year, And No One Cares
1.FutureWorld has seen its stock price in free fall over the past month.
2.A negative working capital position is troublesome, but a recent win for "product of the year" appears to suggest a favorable future.
3.The award win appears to have had no impact on the stock price, even though a favorable spin-off appears to have been designed to provide incentives to buy and hold the stock through early April 2015.
4.With a 2014 52-week high at $0.042 and a recent price of $0.015, recent selling suggests a pattern consistent with "tax-loss selling."
5.This looks like an easy double in early 2015, when the "January effect" and spin-off shares period and event dates hit.
FutureWorld Corporation is a Delaware corporation with a negative working capital position. Consolidated financial statements include the accounts and operations of FutureWorld Corporation and its wholly-owned subsidiaries: (1) URVape, Inc., (2) HempTech Corp., (3) CB Scientific and (4) MedTest Inc. None grow, distribute or sell marijuana. FWDG had 15 employees and 7,000 shareholders of record as of October 2, 2014.
The chart, uninterrupted by the recent award win, really appears to suggest that retail traders are "dumping their losers" and/or "matching losses to gains." This is called "tax-loss selling."
CB Scientific, a wholly-owned subsidiary of FutureWorld, won the "product of the year" award at the 2014 Cannabis Business Awards on December 10, 2014. There were quite a few awards. However, "product of the year" is probably a good one to win:
Categories for the 2014 Cannabis Business Awards
1.Best Flower
2.Best Concentrate
3.Best Edible
4.Most Valuable Cannabis Industry Organization
5.Most Valuable Cannabis Activist
6.Most Valuable Cannabis Advocate
7.Most Valuable Media Source
8.Most Valuable Political Industry Representative
9.Most Valuable Non Profit
10.Best Publication
11.Most Valuable Cannabis Business
12.Most Valuable Educational Institution
13.People's Choice Invention of the Year
14.People's Choice Award for Best Marijuana Infused Product (Medical)
15.People's Choice Award for Best Marijuana Infused Product (Retail)
16.People's Choice Best Medical Center
17.People's Choice Best Retail Center
18.Cultivation Master of the Year
19.Extract Artist of the Year
20.Bud Tender of the Year
21.Manager of the Year
22.Industrial Hemp Industry's Most Influential Individual
23.5 MVP Awards
24.Product of The Year (CB Scientific THC & CBD Home Test Kits)
(click to enlarge)
The CB Scientific Spin-Off to FWDG Shareholders
CB Scientific is based in Denver, CO. Subject to certain conditions, CB Scientific will distribute 5MM shares to FutureWorld shareholders of record on each of the following event dates: (1) January 1, 2015, (2) February 1, 2015, (3) March 1, 2015 and (4) April 1, 2015. FutureWorld will, effectively, retain control of CB Scientific.
Whether by design or by accident, these shares will be made to and benefit those purchasing shares of FutureWorld on or before December 31, 2014 (the end of the "tax-loss selling" seasonal), and might stimulate some buying interest on the FWDG stock price post-early January through April 2015.
7. InMed Pharmaceuticals, Inc. (OTCQB:IMLFF) - From Software to Marijuana? Really?
InMed Pharmaceuticals, Inc., formerly, Cannabis Technologies, Inc. (CANLF), is a Canadian corporation. Before entering the marijuana sector (May 2014), it was in the networking and software business. 1:10 and 1:15 reverse splits were executed in the distant past, and predated the company's entry into the marijuana sector. Its 1-year chart follows:
This firm has a negative working capital position, no revenues and is only generating positive cash flows from financing activities. The loans are to both related and non-related parties. Consulting fees are being paid to related parties (officers). There is no compelling reason to invest in this firm, and related-party transactions of this sort are rarely positive.
8. MedBook World, Inc. (OTCQB:MBOO) - Another Mining to Marijuana Transition?
MedBook World, Inc. is a Delaware corporation with a negative working capital position. Its total assets consist of $4,349 in cash. Debt is comprised of $215,000 in shareholder loans. There are no revenues. This firm was in the book business, but incoming executives were in the mining business. IHUB lists this business as marijuana or "cannabis" as of December 2014. There is no stock price or trading activity. A 1-year chart is provided below:
The below is from the firm's 8-K filed on December 16, 2014:
“
Appointment of Officers and Directors On December 12, 2014, following the resignation of Daniel Masters as President and CEO, Mr. Frederick Da Silva was appointed President and CEO of the Registrant, to fill the vacated positions of Mr. Masters. On December 12, 2014, following the resignation of Anthony Turnbull as Secretary, Treasurer and Director Mr. Daniel Masters was appointed Secretary, Treasurer of the Registrant, and Mr. Frederick Da Silva was appointed to the Board of Directors to fill the vacated positions of Mr. Turnbull.
Biographical Information
Mr. Da Silva holds a business diploma in Finance and Marketing, and for the last five years, has been directly involved in raising investment capital for several companies in the mining and natural resource sector, ranging from start-up companies to emerging public companies. From February 2013 to the present, Mr. Da Silva has been and continues to be an officer and director of Centor Energy, Inc. From May 2013 to February 2014, Mr. Da Silva was an officer of BrightRock Gold Corp., and from March 2014 to the present, he has been [resident and a director of National Asset Recovery Corp.
9. mCig, Inc. (OTCQB:MCIG) - Consulting Pays Well, But Nothing Left For Shareholders
mCig, Inc. is a Nevada corporation with a negative working capital position. The revenues and gross margins are wonderful, but consulting fees almost perfectly match the operating loss for the past six months reporting period, at $1.8 million. The 1-year chart follows:
From the notes to the financial statements:
“
Consulting costs increased to $750,767 from $15,900 for the three months ended October 31, 2014 and 2013, respectively. Our consulting costs increase is related to increase in salaries and primarily from common stock issued for services from our Chief Executive Officer.
10. Primco Management, Inc. (OTCPK:PMCM) - Does Someone Have Change For A Penny?
Primco Management, Inc. is a Delaware corporation, and has an excessively negative working capital position, including convertible debt. The company has wonderful gross margins on tiny revenues, but its largest operating expense is consulting fees. The only positive cash flows are being generated from convertibles and the sale of stock. The 1-year chart follows:
From the notes to the financials:
“
The Company was incorporated on October 14, 2010 under the laws of the State of Delaware. The Company is a real estate management and property development company and., through its wholly-owned subsidiary, Top Sail Productions, LLC, produces and distributes recorded music and intends to co-produce for distribution lower budgeted motion pictures. In February, 2014 the Company expanded its operations to include the leasing and property management of facilities for the legal cultivation of medical cannabis, and the acquisition of and/or entering into joint ventures with third parties involving the planning, staffing, management and operation of legalized medical marijuana dispensing and cultivation.
11. Affinor Growers, Inc. (OTCQB:RSSFF) - Another Shift from Gold Mining to Marijuana
Affinor Growers, Inc. is a Canadian corporation. The company's accounting firm and the Grant Thornton name is a favorable brand. It has an extremely favorable working capital position, tiny revenues, more than $½ million (Canadian dollars) in "share-based payments," and is generating positive cash flows, only, from the sale of stock. From the notes to the financial statements:
“
As of May 23, 2014, Affinor Growers (hereafter "the Company") was specialized in exploration of gold mineral sites located in Canada, since that date, the Company is focused on the agriculture industry within North America. In May 2014, the Company decided to change its name to Affinor Growers inc. This decision aims to better reflect the mission of the Company that is to produce strawberries and other crops such as romaine lettuce and herbs and to produce and sell medical marijuana.
The 1-year chart follows:
This firm appears to spend a fair amount of money on PR releases. There is no compelling reason to invest in this firm.
12. Indie Growers Association (OTCQB:UPOT) - Another Convert from Minerals to Marijuana
Indie Growers Association is a Nevada corporation with a $68 million market capitalization. Its accounting firm has a fair number of toxic clients. The company switched from minerals to herbs in April 2014. It appear to have a negative working capital position, based on its unclassified balance sheet. Revenues of $29,000 are offset by a whopping $61.8 million extinguishment of debt (starting at a stock price of $300 per share, for the purpose of valuation). The firm's only positive cash flows are from financing activities. The 1-year chart follows:
From the notes to its financial statements:
“
The company was initially organized for the purpose of acquiring and developing mineral claims and is in the pre-exploration stage. On April 28, 2014 the Company name was changed from Viking Minerals, Inc. to Indie Growers Association to reflect the change of business. The Company through acquisition of River Ridge Sunshine Farms LLC is now in the business of sub-leasing its land to licensed marijuana growers.
On April 28, 2014, the Company entered into an agreement to acquire a 30 % interest as well as a long term lease on the remaining 70 % of River Ridge Sunshine Farms LLC ("RRSF"), a $ 1.2 Million agricultural property in Prosser, Washington in exchange for 62,000,000 shares. After completion of due diligence, the agreement was amended and executed on June 30, 2014 and completed and closed on July 1, 2014. The market value of the Company's shares as of the date of the acquisition was $0.75 per share there by valuing the acquisition at $ 46,500,000.
This stock has been a great short for some.
Summary
Recall that I am doing some preliminary research to develop a long-term marijuana portfolio for a "buy and hold." If some of these stocks are up over the past week or so, that is likely nothing more than tax-loss selling followed by the January effect, and those buying back in after 30-day wash sale rules have expired. I will work on the next 12 marijuana stocks, or Part III, in the next few months. There are about 55 marijuana stocks, so this preliminary research is just that. My objective is to provide a bit of data prior to the next big event date, which is likely to be the November 2016 elections for additional states that might consider putting recreational marijuana initiatives on the ballot.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
12 Marijuana Stocks For Your Do Not 'Buy And Hold' List - Part I
Dec. 25, 2014 1:49 AM ET | 28 comments | Includes: BAYP, BRDT, CBGI, ERBB, GRCU, ICBU, LGBI, LXRP, NDEV, REFG, SING, SPRWF, THCZ
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Summary
•I have selected 12 marijuana stocks to research, where 8 (~67%) of these 12 stocks are incorporated in the state of Nevada.
•Nevada has only 8% of the market in “the market for corporate law,” but provides a “safe haven” for fraudsters.
•These stocks might be good for a “day-trade,” but unless something very significant changes, they are not good for a long-term “buy and hold.”.
•Look at the event dates, how and why most of the 52-week highs were achieved.
•You can still make money trading these stocks, but, most likely, only if you are able to anticipate and “go along for the ride” on the next “pump and dump.".
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My first marijuana stock article on Seeking Alpha drew a bit of fire, but mostly from those associated with Nevada Corporations. This is the first of a series that I will putter with, over the next few months. There are just too many of these "wanna be" marijuana stocks to examine and review in a single SA article. It seems, really, that they are just falling out of the sky. I hope you find this first installment helpful. I am guessing that 4 more, in groups of 12, may be necessary in the months that follow. I will be looking at fundamentals, but also "the company they keep."
Marijuana is the New "Next Big Thing"
Marijuana is the new "next big thing," so expect some firms to go from, say, energy exploration or gold mining (two of the last "next big things") into marijuana (e.g., Bayport International Holdings, Inc. (OTCPK:BAYP), a Nevada corporation). Bayport is not included in the 12 stock examined, but is a Nevada Corporation and "the poster child" for the "next big thing" pump and dump, followed by a reverse-split.
Investigating "Next Big Thing" Marijuana Stocks
Generally recommendations before buying any marijuana stocks follow:
First, check the state of incorporation. If incorporated in the state of Nevada, proceed cautiously. Note that the state of Nevada has a differentiated product, minimizing disclosure. Minimal disclosure is good for executives and officers, but bad for shareholders. It is the opposite of transparency. Nevada uses their differentiated corporate law to attract those interested in this feature of their corporate law and to generate premium tax revenues from corporate filing fees.
Delaware is the leader in "the market for corporate law," at about 54% market share, and the tax revenues are so high that they do not need a sales tax and their property taxes are relatively low. Because I live in Southeastern Pennsylvania, I know about the 0% sales tax rate in Delaware and their enjoyment of the lower property taxes made possible by their leadership position in the area of corporate law and their collections of corporate filing fees.
Second, check the firm's auditor, accountant and legal counsel and their other publicly-traded clients. We are known by the company we keep. This website works well for this research. Merely enter the ticker symbol and examine the "company profile" tab on the left. Click the link for the accountant/auditor and counsel. Look for stop signs, skull and cross bones insignia, and yield signs associated with their client lists. The more warning signs, the more likely that your target stock is engaging accountants and attorneys likely "making a market" in representing scoundrels. Some examples follow:
Finally, look at a variety of fundamental measures: (1) Look at the working capital position. If negative, why buy the stock? This represents a failure to maintain a "going concern" assumption. U.S. GAAP requires that these firms restate assets at net realizable value (a conservative approach). (2) Where are cash flows coming from? If negative cash flows from operations are being funded by positive cash flows through stock and debt sales, why are you buying stock in a firm diluting your ownership interest? (3) Look at the number of "paid for" press releases. If they are constantly paying for news releases that appear to be favorable, yet the stock price per share is not rising, consider the possibility that they are selling stock into insider-controlled, news-based rallies, and you, as a shareholder, will never benefit from stock price per share appreciation (i.e., suboptimal trading). (4) A history of reverse splits is, of course, "the kiss of death." Don't buy stock in these firms. They pump, dump, reverse split, and repeat the process. They only sell "pipe dreams" and stock.
Marijuana Stock 52-Week High Event Dates
Let's look at the 52-week high event dates for the 12 marijuana stocks I have selected. They are listed below, in ticker symbol alphabetical order, as follows:
State of
MJ from
52-Week
Ticker
Incorporation
Mining?
High
1
OTCQB:BRDT
DE
No
19-Mar
2
OTC:CBGI
NV
No
18-Mar
3
OTCPK:ERBB
NV
No
24-Mar
4
OTCPK:GRCU
CO
No
7-Apr
5
OTCPK:ICBU
FL
No
24-Mar
6
OTCPK:LGBI
NV
Yes
25-Jul
*
7
OTCQB:LXRP
NV
Yes
19-Mar
8
OTCPK:NDEV
NV
No
26-Aug
9
OTCPK:REFG
NV
Yes
14-Mar
10
OTCPK:SING
NV
No
10-Jan
11
OTCPK:SPRWF
Canada
Yes
22-Oct
*
12
OTCPK:THCZ
NV
No
12-Aug
*
* Not trading in March, so excluded from graphic.
Note that 4 of the 12 or about ~33% of these firms were in some form of mining or energy industry. Also, note that the vast majority of the 52-week highs (6 of 12 or 50%) for these 12 stocks occurred in March 2014. This is the event date/period for the Canadian MMPR (Marihuana for Medical Purposes Regulations). That was the event date that drove these 52-week highs. Unless a similar event is scheduled in the near term, there is no compelling reason to purchase any of these marijuana stocks in the near term. A graphic is provided below:
Some Thoughts on the First 12 Marijuana Stocks Follows
1.BreedIT Corp. - You Say Tomato, I Say Why Not Potato?
BreedIT Corp. is a Delaware Corporation with a very significant and positive working capital position. Cash flows are being generated from stock sales and warrant purchases. There are numerous dilutive sales of stock, warrants, restricted warrants, and options at significant discounts. Operating cash flows are negative. Their accounting firm has an extensive list of publicly-traded clients (100+), though quite a few have warning signs on the PinkSheets website. Their business description follows:
“
The company acquired an exclusive worldwide license for a unique and highly sophisticated decision-making software used for the purpose of advanced agriculture breeding (the "IDSS Software"). The company's plan is commercially exploit (sic) the IDSS Software and anticipates that it will be fully ready for worldwide marketing in 2014.
Prior Seeking Alpha Article Recommendations and Performance
1.Mar. 23, 2014 12:29 PM ET SA article - sell or do not buy, yet, at $0.72 per share.
2.Apr. 21, 2014 11:25 AM ET SA article - sell or do not buy, yet, at $0.44 per share.
3.Jun. 3, 2014 10:37 AM ET SA article - buy and hold at $0.42 per share.
4.Dec. 12, 2014 close at $0.09 per share.
The 1-year chart follows:
I cannot quite understand why a "unique and highly sophisticated decision-making software used for the purpose of advanced agriculture breeding (the "IDSS Software")" would be useful for marijuana and no other, perhaps higher priority, agricultural products. After all, increased marijuana production might lead to "the munchies" and greater demand for food. For this reason, a "wait and see" approach seems prudent.
2. Cannabis Group, Inc. - Gambling Without Information
Cannabis Group, Inc. is a Nevada Corporation that has been identified as a troubled firm. As of July 14, 2014, approximately 2 months after the SEC trading halt, the CEO/Chairman Mr. Cummings resigned.
With a 52-week high of $0.48 and a December 12, 2014 closing price of $0.002, Cannabis Group is "on sale." However, purchasing perishables after their expiration date is always risky. The firm's negative working capital position and some very crude or unprofessionally prepared financial statements without any footnotes, lead one to conclude that the warnings on the PinkSheets website are understandable and warranted. Sentiment on the IHUB stock chat message board is negative, and, while it is possible for a recovery, perhaps under new leadership, this one is a lottery ticket (i.e., gambling without information). The 1-year chart follows:
3. American Green, Inc. - Where are the Financials?
(Thanks to Alan Brochstein, CFA for catching my oversight/error)
The Company was incorporated on November 12, 1998 in Nevada as Ti-Mail Inc. During the year 2000, it changed its name to Desert Winds Entertainment, Inc., and then during 2000 to SunnComm, Inc., during 2002 to SunnComm Technologies, Inc., and during 2004 to SunnComm International Inc. On June 14, 2007, the Company changed its name from SunnComm Technologies Inc. to The Amergence Group, Inc. On March 8, 2011, it changed its name to Altitude Organic Corporation. On January 6, 2012, the Company changed its name to Tranzbyte Corporation, and then on May 9, 2014, to American Green Inc.
The firm has a negative working capital position, but has revenues with a favorable gross profit percentage, though positive cash flows are being generated, only, from financing activities.
The 1-year chart follows:
With a market capitalization of nearly $50 million, the annual information and disclosure statement is provided, but there are no financial statements. The capital structure appears to be overly complex, with common and 2 classes of preferred stock. It is odd that the firm cannot provide financial statements, even a set of financials in poor form might be better than nothing.
Their accounting firm has only American Green as a publicly-traded client. Yahoo Finance has some financial information, but a negative working capital position is not favorable.
Their legal counsel has quite a few publicly-traded clients, but appears to have made a market with troubled firms. The firm has a nice website, and I hope they do well, but would not buy their stock.
4. Green Cures & Botanical Distribution, Inc. Has Little To Distribute Among Many
Green Cures & Botanical Distribution, Inc. is a Colorado Corporation with a negative working capital position and a complex capital structure:
“
At September 30, 2014, the company issued a Convertible Note payable to Green Cures, Inc. for $82,499 plus interest at 5% per annum, accrued monthly, due on or before February 1, 2015. The amount of the note reflects advances from Green Cures, Inc., to the company from July to September 2014.
Green Cures, Inc. is a California Corporation and holds the controlling interest in GRCU through voting Series A preferred shares. There is no compelling reason to buy and hold GRCU. The 1-year chart follows:
5. IMD Companies, Inc. - Cost Of Sales Rising
IMD Companies, Inc. is a Florida Corporation with a negative working capital position. Cost of sales, as a percentage of revenues, have risen, dramatically. Shares of stock have been issued for acquisitions and to pay expenses. The convertible notes sections of the financials should be examined, carefully, before purchasing this stock. Their accounting firm has quite a few clients with cautionary notes on the PinkSheets website. This stock is not likely to represent a favorable candidate for a buy and long-term hold. The 1-year chart follows:
6. Cannabiz Mobile, Inc. - No Favorable Buzz For This Biz
With a 52-week high of $3.75 per share, you really have to wonder how we reach a 52-week low price per share of $0.004. I guess this is why some short penny stocks.
Formerly, Lion Gold Brazil, Inc. (until 6-2014), the corporate name change was not accompanied by a ticker symbol change, and the 8:1 ex-date reverse split (on June 24, 2014) was probably not to be viewed as favorable by shareholders, as the below chart suggests. This is just another Nevada corporation in the mining business, converted to "the next big thing" - marijuana, as gold prices decline and the trend toward legal marijuana use for both medical and recreational purposes provides greater promise for those "selling stock."
Cannabiz Mobile, Inc. is a Nevada Corporation with no revenue and not to be troubled to take the time to develop a classified balance sheet or notes to their financial statements. No matter. The financials provide no evidence to compel anyone to buy this firm's stock. With no accounting firm and a legal counsel with 5 of 6 publicly-traded firms with negative indicators on the PinkSheets website, you would really have to get a buzz to get into this biz. The 1-year chart follows:
7. Lexaria Corp. Moves From Oil And Gas Exploration To Marijuana
Lexaria Corp. is a Nevada Corporation with a positive working capital position. Revenues, through June 2014, have been generated from oil and natural gas. Positive cash flows have been generated from financing activities.
From the notes to the financials:
“
The company was formed on December 9, 2004 under the laws of the State of Nevada and commenced operations on December 9, 2004. The company is an independent natural gas and oil company engaged in the exploration, development and acquisition of oil and gas properties in the United States and Canada. The company's entry into the oil and gas business began on February 3, 2005. In spring of 2014, the company added another business sector in its entrance to medical marijuana.
The 1-year stock price chart follows:
It always concerns me when a firm moves from "the last big thing" to "the next big thing," and Lexaria reminds me, a bit, of Bayport, also a Nevada Corporation. I will try to keep an open mind on this one, but I see no compelling reason to buy at this time.
8. Novus Acquisition Development Corp. - Perhaps A Trade, But Not A Buy And Hold
Novus Acquisition Development Corp. is a Nevada Corporation. The financial statements were prepared by someone lacking basic typing or formatting skills (see below). Three different formats are used for the dates/headings. Commas are sometimes used and sometimes not used for thousands. Perhaps these financials were produced during periods and by those involved in product testing.
(click to enlarge)
Working capital is positive and the firm was profitable during its last quarter (September 2014). However, how a firm with assets of $34,000 and most recent quarterly revenues of $40,000 achieves a market capitalization of $58MM is not easily understood. Perhaps the following Forbes contributor article, naming Novus as the #1 marijuana stock pick, explains the valuation:
“
This red-hot, Miami-based consulting company provides a medical cost-savings plan for people who'd like to receive alternative medical treatment - namely, cannabis. For less than $20 a month, subscribers receive steep discounts on the cost of their prescribed weed. Last month, Novus rolled out its Medplan benefits network to states where medical pot is legal, and hired another sector startup, organic grower TKO Organics, to grow and dispense its patients' ganja in seven states.
I suppose this business model makes sense to many.
The 1-year chart follows:
The 1-month price per share chart and associated table identifies a sharp decline in the price per share, associated with high volume, on December 10, 2014. Possible explanations for this trading activity were a topic of debate on the IHUB stock chat message board. Some noted that 93% of the stock is controlled by executives.
Date
Open
High
Low
Close
Volume
Dec 12, 2014
0.30
0.34
0.30
0.34
107,800
Dec 11, 2014
0.20
0.37
0.20
0.30
497,600
Dec 10, 2014
0.36
0.38
0.17
0.17
289,400
Dec 9, 2014
0.37
0.39
0.34
0.36
61,300
Source: Yahoo Finance
A valuation that does not make sense to me, a business model that does not make sense to me, and some recent, odd trading behavior that does not make sense to me all contribute to my existing concerns over basic typing skills and the fact that this firm is incorporated in the state of Nevada. If subscriptions revenues start to roll in, I will have to take another look at this one. One stockholder was very upset and took exception to the above when posted on the SA Instablog, assuring me that this firm was "for real."
9. Medical Cannabis Payment Solutions - There's No Business Like No Business
Medical Cannabis Payment Solutions is a Nevada Corporation, based in Las Vegas. The firm has a very favorable working capital position from debt and equity issues, and management and those associated with the firm have some impressive credentials, but there are no significant revenues. IHUB sentiment is thin, but positive, primarily based on some penny stock promotional campaigns (September 23, 2014) and the anticipation of more in the future. The 1-year chart follows:
I would put this one on your radar screen, wait for the next "pump," consider "trading," but don't stay in for past the "dump." I like the pedigrees for those involved, but would like to see some evidence of execution and prospects for significant, incoming revenues.
10. Singlepoint, Inc. - Sorry For Your Loss
Singlepoint, Inc. is a Nevada Corporation with a negative working capital position. Promotional materials provide some information on the firm. The firm's capital structure is a bit of a "red flag:"
“
Each share of Series A Preferred Stock votes with the shares of Common Stock and is entitled to 15 votes per share and ranks senior to all other classes of stock in liquidation in the amount of $1 per share.
With a 52-week high of $0.31 and a December 12, 2014 close at $0.006 per share, long-term SING shareholders are singing the blues. This one might best be avoided as a long-term hold. The 1-year chart follows:
11. Supreme Pharmaceuticals, Inc. - There's Gold In Them Thar Bongs
Supreme Pharmaceuticals, Inc. is another firm getting out of mining and getting into marijuana. This is just another firm going from "the last big thing," which was gold, to "the next big thing," which is marijuana. When you fail in one industry, why not try your hand at another, completely unrelated industry? The common theme that is likely is failure. The 5:1 reverse split has been executed (July 29, 2014), so it is time, again, to sell some stock. The 1-year chart follows:
On the other hand, this video was impressive. Still, I might sit on the sidelines for a little bit.
12. Totally Hemp Crazy - Totally Crazy To Invest In This One
Totally Hemp Crazy, Inc. is a Nevada Corporation with a negative working capital position and quarterly sales approaching $1,000, and, they managed to generate a profit during this quarter, despite deferred consulting fees approaching $300,000. It has been a long time since I have seen a publicly-traded firm disclosing pennies in their financial statements. And why are all the pages slanted? The 1-year chart follows:
Do I think you should buy stock in this firm? I think you would have to be crazy…totally.
Remember, What Happens in Vegas Stays in Vegas - This Might Include Your Money!
Nevada is known for legalized gambling, legalized prostitution, and a safe haven for fraudsters looking for a corporate law that facilitates non-disclosure and non-transparency. This does, not, of course, mean that all Nevada corporations are evil. Similarly, all Nevada prostitutes will not give you a STD and you might put a quarter in a Nevada slot machine and hit the jackpot. And all formerly mining stocks are, also, not evil, but take a few minutes and glance at BAYP. Be particularly cautious when buying Nevada corporation stocks, or any, touting the "next big thing," and do a bit of due diligence before "pulling the trigger" on these and other marijuana stocks.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
Read the article from Seeking Alpha. CANL should be our largest competitor for labs, read the article below.
12 Marijuana Stocks For Your Do Not 'Buy And Hold' List - Part III
Jan. 9, 2015 1:29 PM ET | 8 comments | Includes: AMMJ, BLPG, CANL, CANV, FITX, GWPH, HEMP, MDBX, MJNA, NMUS, PMCB, THXBY
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I do not have any money invested in any of these stocks at this point in time, but might "trade" some of these stocks, most likely between now and late March or early April 2015, for the seasonal-based reasons stated in this article. At this point in time, there is no compelling reason to buy and hold and I do not recommend a long-term buy-and-hold on any of these stocks. I never short penny stocks. (More...)
Summary
•I have selected a third set of 12 marijuana stocks to research, where n=19 (~53%) of N=36 stocks are incorporated in the state of Nevada.
•All of these stocks might be profitable "day-trades," but my focus remains on the long-term and development of a buy-and-hold portfolio.
•The data continues to support a focus on "event dates;" and we are at the beginning of “penny stock season.”.
•Barring positive, firm-specific events, in the near-term, it is probably best not to buy and hold a portfolio of or any of these stocks past March or April 2015.
•Generally, hold through March/April 2015, sell, buy in June-August 2015, sell in January-April 2016, and buy in June-August 2016 to position for the November 2016 elections.
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Motivation
1.Knowing which stocks to buy (and generate gains), and when to buy, is important.
2.Knowing which stocks to avoid (and generate losses) is equally important.
3.This article is designed to assist you in (1) buying low and (2) selling high.
5 States are likely to put Recreational Marijuana Legalization on the 2016 Ballot
At this point in time, (1) California, (2) Nevada, (3) Massachusetts, (4) Maine and (5) Arizona are likely to put marijuana, for legal recreational use, on the November 2016 ballot. More could be added to this list. California is the "prize." Texas, Florida and New York are also relatively high population states, where Florida is a possible.
Combined, Alaska, Washington, Oregon, Colorado, and D.C. represent approximately 5% of the U.S. population. A favorable vote (November 2016) on recreational marijuana legalization in California, alone, a state representing more than 10% of the U.S. population, will triple the market for recreational use.
Of course, many are attracted to these marijuana stocks, as they anticipate, eventually, that 100% of the U.S. will legalize marijuana for recreational use. What other industry is likely to enjoy growth at 20 times the current market for their product?
Back-Testing Value-Weighted and Equal-Weighted Portfolios of Marijuana Stocks
My fist marijuana stock Seeking Alpha article listed N=47 stocks. That number has grown and is a bit of a moving target, which provided the motivation for this series, where I, cumulatively, examine n=12 stocks for each part of the series. (See Matthew Finston for some significant and insightful Seeking Alpha articles on marijuana stocks and this evolving sector or segment of the economy.)
Based on the above, previously published portfolio, below are both value-weighted (VW; at 1 share of stock) and equal-weighted (EW; at $500 invested per stock) portfolio charts. The VW portfolio excludes friction or commissions. Buying and selling commissions were presumed at $8 for each purchase and sale ($16 per round-trip) for the EW portfolio. The EW portfolio appears to have performed more favorably, at least when visually examining chart results (December 2, 2013 through November 28, 2014), as follows:
March 2014 was the Winning Event Date/Month and an Equal-Weighted Portfolio is the way to approach Marijuana Stock Investing
For both of the above, there were n=20 losers and n=27 winners (EW). Note that (1) the greatest returns occurred from early January purchases through March sales and (2) only a tiny bit of returns were generated, visible in the VW chart, for the November election and approval of recreational marijuana by Alaska, Oregon and the District of Columbia. These are relatively low population states and D.C.
For the EW portfolio, the $23,876 invested (i.e., $500+$8=$508x47), grew to $68,582 (a ~187% return), net of the sell commission. That is a very favorable 12 month return. The 52-week high occurred on March 18, 2014 at $559,617 (the line chart tends to "smooth" these measures).
For the VW portfolio, at 1 shares each, and without any commission or friction, the value of the portfolio grew from $90 to $118 (a ~31% return). Not as favorable as the EW portfolio, but still quite favorable for a 12 month period. The 52-week high occurred on March 5, 2014 at $323 (the line chart tends to "smooth" these measures).
Why the March 2014 Highs and Why January, February and March are Favorable?
For lack of a better characterization, January, February and March are "penny stock season." These months follow "tax loss selling" of "losers" in November and December of the prior calendar year, and, as selling pressures subside in January ("the January effect"), price per share recovers. When combined with the March 2014 events. From my earlier article:
“
…note that the vast majority of the 52-week highs for these 24 stocks occurred in March, 2014, the event date/period for the Canadian MMPR (Marihuana for Medical Purposes Regulations). That was the event date that drove so many of these 52-week highs.
You must keep in mind that Canada has a very small population, when compared to the U.S. This is, in part, why these marijuana stock prices did not "stick." The timing was perfect. March is considered, by many, to be the end of "penny stock season." Selling occurs in April and June, July and August are the times to buy penny stocks, to purchase at relatively low prices and for a long-term hold. This is anecdotal, but those experienced in penny stock trading can verify this general perception and fact.
Notes: The above bar chart was generated and based on data available after the market close on January 6, 2015. The bar chart was developed and is based on data contained in the below table. The below table format has been modified to capture more data than was presented in Part I and Part II of this series.
SEC Trading Suspensions
From the SEC website:
“
The SEC has seen an increase in the number of investor complaints regarding marijuana-related investments. The SEC recently issued temporary trading suspensions for the common stock of five different companies that claim their operations relate to the marijuana industry:
1.FusionPharm, Inc.
2.Cannabusiness Group, Inc.
3.GrowLife, Inc.
4.Advanced Cannabis Solutions, Inc.
5.Petrotech Oil and Gas, Inc.
The SEC suspended trading in these companies because of questions regarding the accuracy of publicly-available information about these companies' operations. For two of the companies, the trading suspensions were also based on potential illegal activity (unlawful sales of securities and market manipulation).
The List of n=12 + n=12 + n=12 = N=36 MJ Stocks
Again, and just as was the case of Part I and Part II, the stocks are listed in alphabetical order of the ticker symbol. The table is designed so that it captures a fair amount of data, and you can print it out and use it to formulate your own opinions on these stocks. The below table, also, contains the data from which the above graphic was developed:
1st
2nd
3rd
State
52-Week
12
12
12
Ticker
of Inc.
WC
High 2014
Notes
1
(OTCQB:ACOL)
FL
-
19-Mar
1
2
(OTCQB:AERO)
NV
-
10-Mar
3
(OTCQB:AGTK)
DE
-
6-Jan
1
(OTCQB:AMMJ)
DE
+
17-Oct
1
4
(OTCQX:ATTBF)
Canada
+
19-Mar
5
(OTCPK:BAYPD)
NV
-
1-Sep
2
2
(OTCQB:BLPG)
NV
-
1-Jul
1
1
(OTCQB:BRDT)
DE
+
19-Mar
3
(OTCQB:CANL)
NV
-
8-Jul
1
4
(OTCQB:CANV)
DE
+
21-Feb
2
(OTC:CBGI)
NV
-
18-Mar
3
(OTCPK:ERBB)
NV
-
24-Mar
5
(OTCPK:FITX)
NV
-
10-24 Feb
1
6
(OTCPK:FWDG)
DE
-
17-Jul
1
4
(OTCPK:GRCU)
CO
+
7-Apr
6
(NASDAQ:GWPH)
UK
+
1-Jul
7
(OTCPK:HEMP)
CO
+
5-Feb
5
(OTCPK:ICBU)
FL
-
24-Mar
7
(OTCQB:IMLFF)
Canada
-
21-Oct
1
6
(OTCPK:LGBI)
NV
-
25-Jul
1,2
7
(OTCQB:LXRP)
NV
+
19-Mar
2
8
(OTCQB:MBOO)
NV
-
Unknown
1,2
9
(OTCQB:MCIG)
NV
-
19-Mar
8
(OTCQB:MDBX)
NV
-
17-Jan
9
(OTCPK:MJNA)
OR
+
28-Jan
8
(OTCPK:NDEV)
NV
+
26-Aug
10
(OTCQB:NMUS)
NV
+
1-Dec
1
11
(NVLX)(OTCQB:PMCB)
NV
+
28-Feb
10
(OTCPK:PMCM)
DE
-
26-Mar
9
(OTCPK:REFG)
NV
+
14-Mar
2
11
(OTCQB:RSSFF)
Canada
+
10-Jun
1,2
10
(OTCPK:SING)
NV
-
10-Jan
11
(OTCPK:SPRWF)
Canada
+
22-Oct
1,2
12
(OTCPK:THCZ)
NV
-
12-Aug
1
12
(OTCQB:THXBY)
Israel
-
6-Jan-15
1
12
(OTCQB:UPOT)
NV
-
26-Mar
1,2
1 = not trading in March 2014, so excluded from above graphic.
2 = moved from mining to the marijuana sector.
Working capital (WC) measures ("+" for positive and "-" for negative) were developed on January 7. 2014, and are based on the measures and data available from Yahoo!Finance and Pink Sheets web sites. Only fifteen of the thirty-six (~42%) had positive working capital balances. If working capital is negative, and positive cash flows are not being generated from operations, potentially dilutive debt or equity issues are likely. This can be problematic when insiders with favorable stock price-per-share purchase prices can interfere with stock appreciation (e.g., these insiders, with superior or perfect information, dump their shares into any rally from positive news releases that they control).
Nineteen of the thirty-six firms (~53%) are incorporated in the state of Nevada, a state that has only ~8% of the market for corporate law, so Nevada has a disproportionately high percentage of publicly traded marijuana corporations. Only 6 of the thirty-six firms (~17%) are incorporated in the state of Delaware, a state that has ~54% of the market for corporate law, so Delaware has a disproportionately low percentage of publicly traded marijuana stocks.
Note that fifteen of the thirty-six (~42%) of these stocks did not trade as marijuana stocks during the March 2014 high. This is telling. The potential for upside over-reactions in marijuana stocks is attracting those firms that are not doing well in mining (8 of thirty-six or ~22%) or other industries or sectors to the "easy money," from stock sales, that are present and driven by the "recreational marijuana frenzy." Expect more firms to enter the marijuana sector or industry. Particularly, those from gold mining, silver mining, and energy/solar industries, where prices for all have declined, cooler heads prevail, and upside over-reactions in stock prices are less likely.
Additional information is provided below for this third group of 12 marijuana stocks. All charts were prepared before the market open on January 8, 2015:
1.American Cannabis Company, Inc. (OTCQB:AMMJ) is a Delaware corporation with positive working capital. Their accounting firm has 5 warning signs out of twelve clients. This is not favorable, as we are known by the company we keep. The partner is also the CFO of a firm (see LinkedIn). This is atypical, but it is possible that her LinkedIn website is not up-to-date. The income statement is favorable, but read the "convertible notes" section of the financials:
“
…convertible..,into shares of the Company's common stock at $0.08 per share…
The stock is trading at about $0.70 per share, and someone has the right to buy at $0.08 per share. I want the same deal they got. I would not buy and hold this stock, and, would go so far as to suggest that the stock should be trading at $0.08 per share, now.
2. Blue Line Protection Group, Inc. (OTCQB:BLPG) is a Nevada corporation. Financials are unfavorable, and, again, related party debt is present. I do not like this. It provides a vehicle to assure favorable, insider treatment and dilution. Even if good news hits the press, insiders have the first opportunity to "feed at the trough" and there is really no reason for them to allow the stock price to rise for common shareholders. I see no compelling reason to buy and hold this stock.
3. CanLabs, Inc. (OTCQB:CANL) is a Nevada corporation with negative working capital, related party debt and preferred shares with a conversion feature that favors insiders. Again, this capital structure is designed to make sure that insiders reap all of the benefits of any stock price appreciation and it is just too likely that they will sell shares into any rally that they control:
Upon the closing of the Merger, the Company, pursuant to a Securities Purchase Agreement (the "Securities Purchase Agreement") issued to an accredited investor 500,000 shares of the Company's 8% Series A Convertible Preferred Stock (the "Series A Preferred Shares") at an original issue price of $1.00 per share (the "Original Issue Price") and warrants to purchase 20,000,000 shares of the Company's common stock (the "Warrants") for an aggregate purchase price of $500,000."
If you do the math, the warrants on the common stock suggests that it is really only worth about $0.025 per share ($500,000 divided by 20,000,000), but it is trading at more than $0.20 per share. Again, I want the same deal they got. I would not buy and hold this stock.
4. CannaVest Corp. (OTCQB:CANV) is a Delaware corporation with positive working capital. This one has a very ugly 1 year chart, but has a great working capital position from stock sales. The below is from the financials:
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On March 1, 2013, the Company issued a Promissory Note (the "Note") to Roen Ventures, LLC, a Nevada limited liability company ("Roen Ventures"), in exchange for loans provided and to be provided in the future in an amount of up to $2,000,000, subsequently increased to $6,000,000. As of December 31, 2013, the principal balance of the Note was $6,092,069. On January 27, 2014, the Company converted $6,000,000 of the Note balance into 10,000,000 shares of common stock of the Company pursuant to the terms of the Note, as amended. On January 28, 2014, the Company repaid Roen Ventures accrued interest on the Note in the amount of $187,453 and principal under the Note in the amount of $92,069.
Am I doing the math correctly? Someone loaned me $6 million and I gave them stock worth $29 million (10 million shares x $2.90 per share)? I would not buy and hold this stock unless I am offered a comparable deal.
5. Creative Edge Nutrition, Inc. (OTCPK:FITX) is a Nevada corporation with a negative working capital position, and has been in the news, lately. Again, look for these related party transactions to determine the actual value of the stock. From the financials:
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Two consultants have loaned the Company $541,350 on unsecured demand notes payable. The notes have a conversion right of a maximum of 60% to the closing bid price with certain limits based on the reporting status of the Company. The loans carry an 8% interest rate. At June 30, 2014, the Company has accrued $20,822 in interest.
I would not buy and hold this stock, unless they offered me the stock at 60% of the bid. I, also, want 8% interest, since I cannot find this favorable rate of return from credit worthy firms and in the broader market.
6. GW Pharmaceuticals PLC-ADR (GWPH) is a United Kingdom corporation with a positive working capital position. This is a real firm, with real earnings, but not a marijuana "pure play." Note, in the below chart, that the stock price spiked a bit in March 2014.
Take your time for a favorable entry price, but this one looks good for a long-term buy and hold. It would appear that the stocks that are not marijuana "pure plays" are benefitting from marijuana-based events, without the terrible decline in price per share that follows the "pump" or upside over-reaction from these event dates.
Of course, the stock is less likely to go up 1,000% in a very few days, as these stocks trade more efficiently, so you are limiting risk, but also limiting upside on an, otherwise, "lottery ticket-type" marijuana penny stock that you might profitably day-trade.
7. Hemp, Inc. (OTCPK:HEMP) is a Colorado corporation with a positive working capital position. It is rare that I see a firm with more than 2 billion shares issued and outstanding. Cool name and ticker symbol, but I would not recommend this firm as a long term buy and hold.
8. Medbox, Inc. (OTCQB:MDBX) is a Nevada corporation with negative working capital position, convertibles and related party notes, from which positive cash flows are being generated. Conversion features for the debt are too complex to produce in this article, but you should review them before considering a buy and hold for this stock. The terms do not favor non-insider or common shareholders. At this point in time, I would not recommend buying and holding this stock.
9. Medical Marijuana, Inc. (OTCPK:MJNA) is an Oregon corporation with a positive working capital position. Five of the 9 firms disclosed as clients of their legal counsel have warning signs on the Pink Sheets web site. Fundamentals in their financials suggest that this one might be worth a nibble, but, again, as we are known by the company we keep, these warning signs concern me. I would not jump in with both feet or buy and hold this one at this point in time.
10. Nemus Bioscience, Inc. (OTCQB:NMUS) is a Nevada corporation with a positive working capital position. This firm does not have any revenues and is generating positive cash flow from private placement sales of stock and warrants. From the firm's website:
December 4, 2014
Nemus To Move Forward With Cannabinoid-Based Therapy For Open-Angle Glaucoma
November 26, 2014
Nemus Bioscience Is Now Quoted On The OTC Bulletin Board Under The Ticker Symble (sic) of "NMUS"
November 4, 2014
NEMUS Completes Reverse Merger With Load Guard Logistics, Inc.
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NEMUS Bioscience and the University of Mississippi entered into a research and in-licensing collaboration agreement this year.
I would put this one on my watch list and consider for a favorable entry price with a possible long-term buy-and-hold. This firm is engaged in glaucoma research, a legitimate, medical application for marijuana.
11. Nuvilex, Inc. (NVLX) and (OTCQB:PMCB) is a Nevada Corporation. They have a very significant and positive working capital position, but no revenues. There are no positive cash flows, in any of the 3 classifications of their statement of cash flows, in the most recent quarter (October 2014). This stock could be a "sleeper," but there are so many shares of stock and warrants flying out the door, that, even if successful, there might be nothing left for non-insider common equity stakeholders.
Three of 7 of the publicly traded firms for their accountant have "stop" signs. Their legal counsel is a bit better. Their Cell-in-a-Box® technology may, in fact, assist those with pancreatic cancer. So, I hesitate to be too critical, but the stock is trading down, at about $0.20 per share. This firm could be legitimate, but their use of marijuana in headlines concerns me, as it suggests some desire to raise capital from the "marijuana frenzy."
With a market cap of $138 million, I hope they do well and save lives, but it troubles me that a cancer cure is combined with a cannabis headline that, also, tends to spike the stock price (October 29, 2014), and, coincidentally, this news is released immediately before the November elections for marijuana decriminalization in OR, AK and D.C. I might be jaded, but I would probably "wait and see" on this one. I am not recommending this stock for a long-term buy-and-hold.
12. Therapix Biosciences Ltd. (OTCQB:THXBY) is an Israel corporation with a negative working capital position. An Ernst & Young member accounting firm as their accountant is a positive, even though unaudited financials were provided. The stock has a bid/ask spread of $0.19/$2.16, and does not really trade with any volume to speak of. A recent transaction provides some evidence of perceived market value by insiders:
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On November 19, 2014, the Company entered into a private placement agreement where 1,300,000 Ordinary shares, 1,300,000 fully vested warrants and 1,300,000 conditional warrants were offered. The total Net proceeds from the offered securities were NIS 650 thousand. As of November 27, 2014, an amount of NIS 300 thousand was received.
One Israeli New Sheqel (NIS) equals $0.26 US dollar, so $169,000 suggests a market value of about $0.13 per share (i.e., $169,000 divided by 1.3 million), excluding the warrants, so well below the bid of about $0.19 per share, unadjusted for the below:
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TEL AVIV, Israel, Oct. 7, 2014 (GLOBE NEWSWIRE) -- Therapix Bio (TASE:TRPX) (OTCQB:THXBY) today announced that its American Depository Receipts (ADRs) have been registered and approved for trading on OTCQB®. The ADRs, each representing 20 ordinary shares, began trading on October 6, 2014 under the symbol THXBY.
I would put this one on my watch list, but would not pull the trigger as a long-term buy-and-hold quite yet. I want more information and would like to see how the stock trades and reacts to news, and also view future news releases of news as it relates to dilution.
Summary of Significant and Actionable Findings
•I recommend an equal-weighted portfolio of marijuana stocks, probably, at a minimum of $500 per stock, for your long-term buy-and-hold portfolio.
•I do not recommend a long-term buy and hold on any marijuana stock "pure plays," at this point in time. There is no immediate event, like that in March 2014, to warrant the risk. Keep economic resources "parked" in a more stable security or cash, in the interim.
•There is too much risk of buying and holding a marijuana stock likely to attract an SEC trading suspension, at this point in time, so, to reduce risk, day-trade or find some alternative methodology to reduce your "holding" period for these stocks.
•For 2014, the January through March period resulted in a significant increase in marijuana stocks. Note that the November election-based increases in marijuana stocks were very modest, by comparison (see the first 2 line charts of value-weighted and equal-weighted marijuana portfolios).
•The November 2014 ballots and elections, adding Alaska, Oregon and D.C. to Washington and Colorado, legalizing recreational marijuana, were not as important as the January through March 2014 period for the 2014 calendar year. These states have tiny populations and did not significantly increase the market for recreational marijuana (again, see the first 2 line charts of value-weighted and equal-weighted marijuana portfolios).
•The next big event date that I am aware of is the November 2016 elections. California, alone, more than triples the market for recreational marijuana. This should be your long-term focus. Keep your eye on the ball and this very significant event date.
•Expect more marijuana industry entrants, particularly from the gold mining, silver mining and energy sectors, where they have failed in one industry, but will attempt to convince you that they can succeed in growing and generating shareholder value in or as a firm supporting the marijuana industry.
•Beware of complex capital structures, for penny stocks, with convertible debt, warrants, preferred stock, and comparable agreements that are likely to benefit insiders and provide strong economic incentives, for them, but not for you.
•Beware of "true believers" touting these thinly capitalized marijuana stocks. If they use an alias, ask them to provide their true identity. If they are unwilling to do this, they are "sniping from cover," and you must decide if this is reasonable.
•Finally, I am not yet ready to "pull the trigger" on these stocks for a long-term hold, and I recommend, at this point in time, that you view them as a "trade" and not as a "buy and hold." Please notify me of any new marijuana tickers to examine in and for Part IV of this series.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
That is really nice, good for you !!!
Scooped up 1,110,000 shares at 0.018. This company will not be here at this price in 6 weeks, its time to buy now !!!